A landowner has the option to sell their land on their own or use a real estate agent or auctioneer. Many times a landowner has been approached by an adjoining neighbor or acquaintance that is familiar with the property and told if they ever wanted to sell, the neighbor or acquaintance would purchase the land. So, why use an agent or auctioneer and pay a commission? The answer to this question can be found in countless stories from land specialist real estate professionals.
The following two actual real world stories can help illustrate the value of properly marketing your property with a land professional.
A widow owned 100 acres she and her husband had purchased years prior. Her neighbor and long-term friend had helped her with numerous projects as needed on her property after the death of her husband. He also owned 100 acres adjoining her land.
The day came when the widow needed additional cash to fund her retirement. Her friend and neighbor learned of her intention to sell her 100 acres and offered to purchase the property at a “fair market price,” which he was familiar with since he owned an almost identical adjoining property. He offered her $250,000 based on his assessment of their property values. The widow was somewhat upset, not with the offer, but with the value as she had always assumed the land was worth more and it was her final asset to fund her retirement. None-the-less she trusted her neighbor and resigned to selling to him.
She was sincerely concerned she would run out of money in retirement and discussed her plight with one of her best friends. Her friend had a son, who was a land specialist real estate agent with United Country Real Estate. She recommended before the sale to let her son do an assessment of the land value just to be sure. She did, and the real estate agent asked that she let him market the property and do a sealed-bid sale as he felt certain she could get more than the neighbor’s offer. She allowed him to do so with the condition that the neighbor could also participate. The neighbor bid $300,000 and the property sold for $350,000 to another bidder.
“Out of Area Buyers”
A farmer had sold numerous large farms over the years and was familiar with recent local farm sales and the value of farm ground in the area, about $3,000 per acre. Therefore, as he prepared to retire and sell his last 1,000 acres, he felt he may not need an agent as he knew the going price per acre and local farmers who would pay that price. Nonetheless, he did know a land real estate professional and interviewed him for his point of view.
In general, the agent agreed with the farmer’s value assessment, but felt with proper marketing – both locally, but importantly outside of the local market – a higher price may be possible. He agreed numerous local farmers would buy the property at $3,000 per acre, but recommended they market the property more broadly and then hold an auction and let the buyers set the price. The farmer agreed and ended up selling his last 1,000 acres for $4,300 per acre, over $1 million more than his original estimate. Interestingly, a few out-of-area buyers bid the price up, but a local farmer ended up winning the bid. Both the seller and agent agreed the bid would not have been realized without the out-of-area buyers setting the true market value.
So, yes, it’s true that the adjoining neighbor many times will end up purchasing the land, but a professional land real estate agent will help ensure they pay the fair market value. And the difference in final selling price can be substantial. Selling your most valuable asset deserves the professional assistance of a real estate agent or auctioneer who specializes in land, as United Country agents do.
Value a Land Real Estate Professional Can Offer
As a land property owner, if you decide to sell your property make sure to interview and find the best real estate professional that specializes in land (versus for example residential). A great land real estate professional will provide the following value to you:
- Proper Land Value Assessment
- Advice on recent land sale values, local and regional market conditions, commercial value, highest and best use, possible recreational value, timber value, mineral rights, water rights, wind value, division of property strategies and more
- Property Land Value Maximizing Strategies
- Third-party and objective advice on property infrastructure and design (roads, ponds, buildings, etc), property/farm management, wildlife management and food plots, easement value potential etc.
- Attract more buyers with broader marketing of your property
- Exposing your property to more buyers to ensure you have the best chance to realize true maximum fair market value and sell as fast as possible (reducing carrying costs). They have the marketing tools and know where/how to advertise and market land listings. Additionally, they naturally provide access to their client base of previous land buyers.
- Selling to the adjoining neighbors without setting the fair market value by exposing it to all interested buyers rarely results in maximum fair market value. It is a basic law of economics, increase demand on a limited asset and the price will increase.
- Professional Showings
- Saves you time and significant effort by allowing for proper distance and more objective discussions with potential buyers until fully qualified. A land agent will be comfortable talking land issues, walking/touring the property, pointing out property specific attribute values and answering land real estate related buyer questions.
- Expertise in Land Real Estate
- A proven professional in land real estate will offer you and your potential land buyers experience, information and a level of comfort in making the large real estate sale or purchase decision. Understanding land issues, current real estate laws and experience is key to providing this value.
- Professional Negotiation
- Allows for proper negotiation separation between you and your buyer; providing a buffer and time for you to thoroughly consider offers and counter offers. Offers third-party credibility on land value justification to the buyer.
- Wealth Creation/Protection
- Advice on 1031 Tax Deferral programs, structured sales programs, timing and tax strategies
- Closing Services
- Since land real estate closings are large, sophisticated and can get complicated, a land specific real estate professional can best ensure the process is done correctly and as smoothly as possible. Experienced professionals deal in complicated land real estate transactions regularly and know how to navigate closings. Often times a professional can get a closing that runs into issues back on track versus losing the sale.
The value of each of these services a great land real estate professional can offer should not be underestimated. And as in almost anything in business, you get what you pay for. Agents and auctioneers who do not invest much in marketing will offer you low commission rates and hope for the best from the local market. Those professionals who are dedicated to helping you find the maximum value for your land will invest in differentiated land marketing to help you get the broadest exposure for your property. They will charge a fair commission and increase your ability to find the maximum market value and in the shortest time. What you should ask is: “Who is the best land agent or auctioneer to list my property, can offer me the broadest exposure for my listing, provides full consulting service for my listing and has an expertise in land.” In the end, the objective is what you net for one of your most valuable assets.
To connect with a professional land agent today for advice on your property, contact United Country at 800-444-5044 or visit UnitedCountry.com.